Thought Leaders in Mobile and Social: Rob Jewell, Founder and CEO of Spruce Media (Part 2)

Sramana Mitra: A customer or lead?

Rob Jewell: A lead, someone who has signed up for Living Social’s daily deals newsletter.

SM: So, Living Social decided to go with your media buying team and technology over its own media buying team and technology to buy on Facebook. Would you talk in a more specific way on what it is that you do differently and why is your team or your technology so much better?

RJ: Our secret sauce is that we focus on building technology that really empowers the media buyers and enables them to optimize the right levers that make a difference in the efficiency of the media buy. I’ll give you an example. It’s a little bit complicated, but bear with me.

If you’re Netflix, and you are advertising on the rest of the Internet, your advertising is going to look something like, “To get a two-week trial from Netflix, click here. Sign up now.” And, of course, they’re going to try all variations of that. On Facebook, where there’s so much opportunity is there are these hyper-targeted audiences that have told Facebook their likes and interests. If you can target those audiences, and target them at scale, and customize the content to those audiences, you can get much better results. For example, we have something we call dynamic ads that we’ve built into our technology. We can take Netflix and target a specific movie title. Say you like “Forrest Gump.” There are probably 20,000 people on Facebook who like that. We can hyper-target that segment with customized creative, with ad text and image for that movie. And we’ll probably see five times better results than hitting a broad category of movie lovers with a broad message. Does that make sense?

SM: Yes. In terms of interfacing with Facebook, obviously, Facebook has to give you access to that kind of hyper-targeting capability. And you need an API to be able to get the data and be able to customize ads based on that data. Would you talk about what Facebook offers in that realm?

RJ: Yes, Facebook has a program called the Ads API program. Spruce Media was one of the first companies to build on Facebook’s Ads API. It gives us access to target anything that’s can be targeted on Facebook. So, if you’re going to go into Facebook’s self-serve advertising system, we have all the same targeting options that you would have. What we provide in addition to that are functionality around, for instance, multi-variant testing, automated optimization, dynamic ad capabilities, deeper and better analytics to measure the effectiveness of your ads. Facebook provides that bare-bones API, and then we’re able to build on top of that and offer our advertisers more functionality than they could get out of working with Facebook directly.

SM: How does the business model work? It sounds like you are doing performance advertising. You are selling performance advertising to your customers, but you have to buy the ads on Facebook because Facebook does not do performance advertising.

RJ: Correct. We have to buy them on a CPC or CPM. In some cases, we will sell to our advertisers on a CPA, in those performance advertising cases. I don’t want to focus too much on that because that is changing. Most of our business is starting to come in through a different means. In other words, what we originally built for was to be a pure licensable technology platform. In that case – and that’s a large growing business of ours – we let someone license our platform and charge him on a percentage of media spending.

SM: I see. Instead of doing performance advertising, you’re licensing your technology so that media buyers can do their media buying on your platform.

RJ: Correct.

SM: And do the targeting and analytics on your platform, and you charge them a percentage of their media spend? It’s like an agency fee?

RJ: Correct. We’ll work with performance advertisers; we’ll work with brands directly; we’ll work with agencies, trading desks, and large e-commerce companies. It spans across the board.

SM: How many advertising dollars are flowing through this kind of optimization process on Facebook right now?

RJ: How much is going through the API program? Is that what you mean?

SM: Yes. Like, yours or somebody else’s optimization engine. I think what you’re talking about is kind of a media buying optimizer.

RJ: Correct, yes.

This segment is part 2 in the series : Thought Leaders in Mobile and Social: Rob Jewell, Founder and CEO of Spruce Media
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